Trading Glossary

The complete trading glossary: every core market term explained in plain English, with examples, why it matters, and how it is used in practice. Covers order types and execution, price and charts, positions and risk, market structure, technical analysis, smart-money and ICT concepts, trading styles, psychology, and markets and instruments. Part of The Trader’s Encyclopedia, alongside the Broker Glossary and the Prop Firm Glossary.

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Trading Glossary — A to Z reference

The language of the markets in plain English: orders and charts, structure and risk, the indicators, the smart-money concepts, and the psychology that decides who lasts.

Order Types & Execution

Market Order: Buy or sell immediately at the best available price
Limit Order: Buy or sell only at a set price or better
Stop Order: Becomes a market order at a trigger price
Stop-Limit Order: Stop trigger that places a limit order
Trailing Stop: Stop that moves with price to lock gains
OCO Order: Two linked orders, one cancels the other
Bid: Highest price a buyer will pay; you sell here
Ask: Lowest price a seller will accept; you buy here
Spread: Gap between bid and ask; your entry cost
Slippage: Difference between expected and actual fill price
Fill: The execution of an order into a position
Volume: Units traded in a period; measures participation

Price & Charts

Candlestick: Bar showing open, high, low and close
OHLC: Open, high, low and close of a period
Pip: Smallest standard price move in forex
Tick: Smallest possible price movement
Point: A whole unit of price movement
Lot: Standard position-size unit in forex
Timeframe: The period each candle represents
Gap: A jump in price with no trading between
Doji: Candle with almost equal open and close
Engulfing: Candle that fully covers the prior one
Wick / Shadow: The thin line beyond a candle body

Positions & Risk

Long: A position that profits when price rises
Short: A position that profits when price falls
Leverage: Borrowed buying power multiplying gains and losses
Margin: Capital required to hold a leveraged position
Position Size: How large a trade you take
Stop Loss: Order that caps the loss on a trade
Take Profit: Order that closes a trade at a profit target
Risk-Reward Ratio: Potential reward compared to risk
R-Multiple: A trade's result measured in units of risk
Drawdown: A fall from an equity peak
Equity: Account value including open trade profit and loss
Exposure: Total capital at risk in the market
Hedging: Offsetting a position to reduce risk
Break-Even: Moving the stop to the entry price

Market Structure

Support: A level where price tends to stop falling
Resistance: A level where price tends to stop rising
Trend: The prevailing direction of price
Range: Price moving sideways between levels
Breakout: Price moving out of a level or range
Pullback / Retracement: A temporary move against the trend
Higher High / Lower Low: The peaks and troughs that define a trend
Consolidation: A pause where price coils before moving
Reversal: A change in the prevailing direction
Swing High / Swing Low: A local peak or trough in price
Liquidity: How easily price can be traded at a level

Technical Analysis

Moving Average: Average price over a period, smoothing trend
RSI: Momentum oscillator of recent gains and losses
MACD: Momentum indicator from two moving averages
Bollinger Bands: Bands set a deviation around a moving average
Fibonacci Retracement: Ratio levels projecting likely pullback depth
VWAP: Volume-weighted average price of the session
ATR: Average true range; a volatility measure
Stochastic: Oscillator of close relative to recent range
Divergence: Price and an indicator disagreeing
Volume Profile: Volume traded at each price level
Pivot Points: Calculated support and resistance levels
Trendline: A line connecting swing points along a trend

Smart Money / ICT

Order Block: Last candle before a strong institutional move
Fair Value Gap (FVG): An imbalance gap price tends to revisit
Liquidity Sweep: A push past a level to trigger stops
Break of Structure (BOS): Price breaking a swing to continue a trend
Change of Character (CHoCH): First structural break signalling reversal
Imbalance: One-sided move leaving a price gap
Mitigation Block: A zone price returns to before continuing
Premium / Discount: Whether price is dear or cheap in a range
Market Maker Model: Accumulation, manipulation, then distribution
Inducement: A trap that lures traders before a reversal
Displacement: A sharp, decisive institutional price move

Trading Styles & Strategy

Scalping: Many fast trades for small gains
Day Trading: Trades opened and closed within the day
Swing Trading: Holding trades for days to weeks
Position Trading: Holding trades for weeks to months
Trend Following: Trading in the direction of the trend
Mean Reversion: Trading a return to an average
Breakout Trading: Entering as price breaks a level
Price Action: Reading raw price without indicators

Psychology & Edge

Edge: A positive expectancy over many trades
Expectancy: Average expected result per trade
Win Rate: Share of trades that are profitable
FOMO: Fear of missing out driving impulsive entries
Revenge Trading: Chasing losses with emotional trades
Discipline: Following your plan under pressure
Risk of Ruin: Odds of losing enough to be wiped out
Overtrading: Trading too often or too large
Confirmation Bias: Seeing only what fits your view

Markets & Instruments

Forex: The global currency exchange market
CFD: Contract tracking an asset's price
Futures: Exchange contract to trade later at a set price
Options: Right, not obligation, to buy or sell
Spot: Buying an asset for immediate delivery
Index: A basket measuring a market's performance
Commodity: Raw goods like gold, oil and grain
Cryptocurrency: Digital assets traded on blockchains
Volatility: How much and how fast price moves
Bull Market: A sustained rising market
Bear Market: A sustained falling market